President of online retailer Rakuten Inc., Hiroshi Mikitani, speaks at the Foreign Correspondents’ Club of Japan in Tokyo on June 29.

Two years later, Mr. Mikitani said the “Englishnization” policy has been a success with steady improvement in the English proficiency of Rakuten’s staff and a greater willingness to communicate in comprehendible, if not perfect, English.

As of April, Rakuten said 79% of documents, meetings and internal communications are conducted in English, an increase from 65% a year earlier.

The company is now taking the next step. Starting in July, Rakuten employees will be required to use English in all internal presentations, documents and memos. In addition, all internal meetings, training sessions, and internal company emails will use English.

“It is not just preferable, it is really critical for us to be able to do business and operate in English,” Mr. Mikitani said at the Foreign Correspondents Club of Japan. “Our staff doesn’t need translators.”

Mr. Mikitani, a former banker turned billionaire Internet entrepreneur, said one of the things holding back Japanese firms from competing globally is a language barrier that prevents them from fully grasping overseas competition. He also said the lack of English proficiency limits Japan Inc. from pursuing global talent and retaining non-Japanese staff.

After implementing the policy, Mr. Mikitani said the company hadn’t offered much support, hoping that people would learn on their own. But sensing that this change was causing a great deal of stress and anxiety for the staff, Rakuten decided to provide free English classes, offered time to study, and made clear that learning English was a part of their job.

Mr. Mikitani said some staff resigned unwilling to go along with the new policy, although he said the number is fewer than most people would think. He said the staff doesn’t need to become native speakers. They just need the courage to try.

“It’s not easy. It wasn’t easy for me and it wasn’t easy for my employees,” said Mr. Mikitani. “I’m hoping that this is the beginning of this trend for Japanese industries, corporate Japan and the society in general.”

Test scores indicate that the hard work is paying off. The average score on the Test of English for International Communication by Rakuten employees improved 32% from October 2010 to this June.

About Japan Real Time

Japan Real Time is a newsy, concise guide to what works, what doesn’t and why in the one-time poster child for Asian development, as it struggles to keep pace with faster-growing neighbors while competing with Europe for Michelin-rated restaurants. Drawing on the expertise of The Wall Street Journal and Dow Jones Newswires, the site provides an inside track on business, politics and lifestyle in Japan as it comes to terms with being overtaken by China as the world’s second-biggest economy. You can contact the editors at japanrealtime@wsj.com